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AVGO
Short Entry 390.1600 2025-12-08 04:12 UTC
Target 374.1400 Fail 419.1300
Risk/Reward 1 : 1
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AVGO
Stocks
Fundamental
1H
Analysis Predict Bear Market
Broadcom's revenue demonstrated substantial growth, escalating from $13 billion to $52 billion over the past decade through the most recent trailing 12-month period, achieving a Compound Annual Growth Rate (CAGR) of 19%. A notable surge occurred between fiscal years 2023 and 2024, with revenue increasing from $36 billion to $52 billion, primarily attributed to the VMware acquisition. Concurrently, the Return on Invested Capital (ROIC) saw a significant decline from 26% in 2023 to 8% in 2024, a typical post-acquisition adjustment. Similarly, the Cash Flow from Operations to Sales ratio decreased from 50% to 39% over the same period, despite Broadcom maintaining its status as a highly profitable entity based on this metric. Valuation multiples indicate a forward P/E of 45.27 and a forward Price to Operating Cash Flow of 45.18. A proprietary Discounted Cash Flow (DCF) model, incorporating updated growth prospects for free cash flow starting in fiscal year 2027, yielded an intrinsic value per share of $374.14. Compared to the current market price of $381.03, the stock appears fairly valued by the DCF method but slightly overvalued by market multiples, leading to an overall assessment of being slightly overvalued. The analyst maintains a 'Hold/Market Perform' rating, suggesting a more attractive entry point would be 10-15% lower than current prices for a 2026 investment horizon.
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